A growing emphasis on reducing greenhouse gases might not be a boon for European bioethanol and could actually hurt the industry, the head of a major biofuel company said on Wednesday.
"My view is that European (bioethanol) production will only survive in a highly protectionist environment because it hasn't got the carbon credentials," Andrew Owens, chief executive officer of Britain's leading biofuels supplier Greenergy told a biofuels conference organised by F.O. Licht.
Biofuels, which are mostly made from crops such as grains and vegetable oils, are seen as a way to reduce emissions of the greenhouse gases believed to contribute to climate change. Some backers also see them as a way to increase energy security.
However, Nobel prize winning chemist Paul J. Crutzen issued a report last month saying most crops grown in the United States and Europe to make "green" transport fuels actually speed up global warming because of industrial farming methods.
Owens said future fiscal incentives and regulations would provide a greater weighting to more sustainable bioethanol -- which is not what is produced in much of Europe.
"Good sustainable biofuels will become more expensive," he said. "Bad biofuels will cease to trade in Europe and that will include a lot of European bioethanol."
"Both economics and sustainability is going to favour Brazilian and African production," Owens said, adding greater carbon savings could be achieved with crops grown in tropical zones. Greenergy, Britain's fourth largest oil company is 22 percent owned by Tesco and 15 percent by Barclays Bank.
CARBON SAVINGS:
Britain has mandated that 5 percent of all motor fuel must come from renewable sources by 2010, a measure known as the Renewable Transport Fuel Obligation (RTFO).
It has also ordered that all biofuel companies must report environmental impacts including carbon savings. "We will not use any European or US produced ethanol in the RTFO scheme...the numbers are not good enough," he said.
Owens said that although there was no fiscal penalty for reporting low carbon savings during the initial phase of the RTFO, corporate reputations were at risk and criticism could be expected from the green movement.
"I don't think anyone is going to survive a bad report. Our numbers will be exemplary," he said. Rob Vierhout, Secretary-General of the European Bioethanol Fuel Association, said his group believed it was enough to demonstrate greenhouse gas savings.
"We believe that of course there needs to be a greenhouse gas saving but it is not a matter of demonstrating savings of 50 percent, 60 percent. If you can demonstrate a saving then that is enough," he told the conference. Vierhout said many countries in Europe were also interested in energy security.
"What I see and that is very much a British reality is the fixation on decarbonisation," he said, adding he believed it would not be clever to replace dependence on fossil fuel imports with bioethanol imports from Brazil.
"This is a philosophy you cannot sell in France and in many other European countries. They want to be self-reliant to some extent so we will not have a totally open market," he added.
Vierhout estimated the European Union will produce about 2 billion litres of bioethanol in 2007, lagging far behind the largest producer, the United States, at 24 billion and second placed Brazil at 19 billion.